February 2021 Passive Electronic Component Monthly Market Research Report

CRL Monthly Review: Passive Electronic Component: Monthly Report:

FEBRUARY 2021 Review

Report Highlights-

• The raw material price index for passive electronic components increased by 8.7% in February 2021 making the index up more than 10% for the year. This clearly breaches our prior thresholds for a global market price correction and is considered a “Red Flag.” Most concerning is the additional price jump for ruthenium, which is impacting the cost to produce thick film chip resistors. Paumanok continues to believe that it is just a matter of time before a shortage impacts the global thick film chip resistor industry.

• Prices for all base metals increased by a collective 10% in February 2021, with zinc prices growing by 17%, impacting the ceramic additives and non-linear resistor markets. Varistors are at a cross-roads of two raw material price increases- palladium and zinc. Copper prices rose 14% in February, aluminum prices increases of 9% and copper prices grew 7%- all responding to General Motors announcement to convert 7.7 MM cars and lite trucks to electric by 2030.

• Early reporting by Murata, TDK, Samsung, Walsin and Yageo indicate the global passive component markets grew by 5.6% in the December 2021 quarter and will contract by 5.1% in the March 2021 quarter. The reporting by vendors showed mixed results, with the Japanese vendors showing growth in December and the Chinese and Korean vendors on the index showing declines in the December 2020 quarter.

• As forecasted, Nichicon, Nippon Chemi-Con and Taiyo-Yuden (Elna) reported 20% increases in polymer aluminum capacitor sales for automotive applications. These V-Chip aluminum capacitor products are key for battery operated vehicles, with many of the high voltage and high capacitance designs only available in either a polymer aluminum or a polymer tantalum. This is also why a price increase was announced by yageo for its KEMET Manganese tantalum capacitor line in the month of February as well. Yageo also reports that 100% of tantalum capacity is being utilized.

• We now estimate that year over year demand for passive components THROUGH MARCH 2021 QUARTER- will decline five percent (-5%) in dollar value but with high capacitance MLCC showing slight growth of about 3% while all other product lines slow down and register a year-on-year decline. Having said that, it appears that certain vendors will enjoy solid growth in the March 2021 quarter and that the FY 2022 looks robust.